U.S. Congress Promotes the CLARITY Act: DeFi Expected to Attract Compliance Wave

I. Overview of Legislation and Core Content

In 2025, the U.S. House of Representatives advanced the Digital Asset Market Clarity Act (referred to as the "CLARITY Act") by an overwhelming majority. The bill has now entered the Senate review stage, and if it passes in the subsequent Senate vote, it will signify another historic step for the U.S. in the field of digital asset regulation.

The core content of the CLARITY Act is to provide clear definitions and regulatory rules for digital assets, especially to delineate the regulatory authority of the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). If the Act is passed, the CFTC will be responsible for regulating exchanges, brokerage firms, dealers, and projects that meet the "mature chain" standards. The SEC will oversee securities-type assets and cryptocurrencies with investment contract characteristics. The CLARITY Act and the GENIUS Act together construct an upstream and downstream regulatory system for digital assets, with the former focusing on blockchain infrastructure and asset classification, while the latter is dedicated to the regulation of stablecoins.

| Category | Regulatory Authority | Core Definition | Key Regulatory Requirements | | Product Category | CFTC | Decentralized, permissionless, native tokens without financial rights (e.g., BTC, ETH) | Managed by CFTC trading platforms, brokers, and dealers. Project parties do not need to register but must meet the "mature chain" standards and report architecture certification | | Securities | SEC | Tokens that have the nature of investment contracts or rely on the issuer to obtain profits (e.g., tokens in the SAFT phase) | Issuers and platforms must comply with the Securities Act, register as broker-dealers/trading platforms, disclose financial and fundraising information, and undergo SEC review | | Payment Stablecoins | CFTC + SEC | Tokens pegged to fiat currency, with 1:1 reserves and used for payments (e.g., USDC, USDT) | Liquidity regulation is mainly handled by the CFTC, while the SEC is responsible for anti-fraud; additionally, must comply with the reserve, audit, and KYC/AML requirements of the GENIUS Act |

The core content includes:

1. Establish the definition of "digital goods" Clearly classify native crypto assets (such as BTC, ETH) that have achieved decentralization and run on open blockchains as "digital commodities," falling under the jurisdiction of the CFTC, distinct from securities regulated by the SEC.
2. Mature Blockchain System Recognition Mechanism The bill introduces the "Mature Blockchain" standard, allowing specific projects to transition their tokens from "securities" status to "commodities" after meeting technical and governance thresholds such as decentralization, governance decontrol, and open-source code, thereby exempting them from the heavy compliance requirements under securities law. Such projects are subject to securities law during their initial issuance phase (e.g., SAFT, ICO, IPO), and once the project completes its decentralization transformation, its tokens can be reclassified as digital commodities, which will then be regulated by the CFTC.
3. DeFi Project Compliance Exemption Clause Exempt DeFi protocols that do not involve asset custody and have no centralized intermediary structure from registration obligations, while clarifying that front-end developers and node operators do not bear financial intermediary responsibilities, thus reducing compliance burdens.
4. Disclosure of Information and Insider Trading Restrictions Platforms operating digital commodity trading markets must register with the CFTC as "digital commodity exchanges," including over-the-counter brokers and market makers. These entities will adhere to strict federal regulatory requirements such as minimum capital, risk management, trade records, regulatory reporting, and customer asset protection. If a company is involved in both securities and digital commodity businesses, it must register separately with the SEC and CFTC. Although the compliance burden is heavy, the act clearly delineates the regulatory boundaries for both parties.
5. Legalization of Traditional Institutions Participation The bill provides a legal basis for traditional financial institutions such as banks and brokerages to offer custody and trading services for crypto assets, promoting broader access for traditional capital to the digital asset market.

2. Impact on the Cryptocurrency Market

1. The regulatory transparency of crypto assets has improved, enhancing market confidence.

The CLARITY Act provides a highly certain compliance path for the entire cryptocurrency industry, ending the long-standing chaos of "enforcement instead of regulation." Both project parties and trading platforms can conduct business within the legal framework. The regulations enhance the transparency of core market infrastructure, help prevent fraud and abuse, and strengthen consumer trust. This, in turn, attracts more institutional funds into the market, enhancing market liquidity and activity. For institutions, it allows them to further achieve compliance, thereby avoiding risks similar to those faced in previous SEC lawsuits. For consumers, the Act mandates that issuers of crypto assets disclose relevant information and impose rules to restrict insider trading, protecting consumers' legitimate rights and interests while reducing investment risks.

2. The U.S. cryptocurrency asset regulatory system is moving towards "de-SEC-ification".

For a long time, the SEC has treated most cryptocurrencies as securities, leading to regulatory disputes for several projects such as XRP, SOL, ADA, and UNI. The CLARITY Act aims to create a new regulatory framework through structural allocation for the vast majority of fully decentralized assets, which will no longer have to comply with the SEC's regulatory system.

3. Traditional exchanges can obtain digital commodity exchange licenses.

The CLARITY Act allows traditional securities exchanges to apply for a "Digital Commodity Exchange" license, which means that in the future, traditional trading platforms like Nasdaq and NYSE may simultaneously offer trading services for both stocks and digital assets (such as Bitcoin, Ethereum, etc.). Investors will be able to seamlessly allocate traditional and crypto assets on the same platform. This not only lowers the user threshold but also provides a compliant and trustworthy entry point for mainstream traditional financial capital into the crypto market.

3. The Impact on DeFi Projects

1. Clarify the exemption mechanism to protect protocol developers.

As long as DeFi projects do not engage in intermediary activities, DeFi developers and operators do not need to register with the SEC or CFTC. Writing code, running nodes, or providing front-end interfaces are generally not considered as providing financial services.

• Non-custodial ≠ Intermediary: If the protocol does not hold user assets and does not provide traditional financial services, its developers, node operators, and front-end maintainers are not considered financial intermediaries and are not required to bear registration or licensing obligations.
• Code and operations are risk-free: Self-publishing smart contracts or wallet software does not constitute a securities issuer, and its actions are similar to technology releases, which are not covered by financial regulation.

2. Introduce self-custody rights to protect the property rights of DeFi users

Section 105 and related provisions ensure users' rights to independently manage digital assets, confirming that users can freely conduct peer-to-peer transactions through non-custodial wallets and legally enjoy control over their funds. This right provides legal protection for DeFi users, allowing them to choose self-custody without fearing policy penalties.

• Legal Custody Freedom: Users manage assets with hardware or software wallets without relying on banks or third-party (financial institutions) intervention.
• Autonomous trading rights: Users can independently initiate on-chain transfers, participate in DeFi protocol governance, and liquidity mining without the need to register with KYC intermediaries.
• Establish the concept of U.S. sovereign digital rights: Incorporate "controlling private keys means controlling assets" into the legislative framework to ensure that actions on private chains are not deemed illegal or requiring permission.

3. Impact on representative DeFi projects:

For most DeFi projects, the operation of their protocols typically aligns with the CLARITY Act's definition of a "non-intermediary" role. Therefore, after the passage of the act, they are expected to obtain clear registration and intermediary exemption qualifications, leading to significant compliance benefits in the short term. However, this does not mean that DeFi has achieved comprehensive compliance. It is noteworthy that the official tokens issued by many platforms still face legal uncertainties regarding whether they constitute securities, which depends on whether they have the characteristics of an "investment contract," such as whether investors' returns are dependent on the actions of the project party. Therefore, while the CLARITY Act provides regulatory clarity at the protocol level, it does not permanently resolve the compliance issues at the token level. To reduce the risk of platform tokens being classified as securities, project parties still need to continuously promote the transparency of governance structures, strengthen community-led governance mechanisms, and gradually decentralize control to enhance the compliance of tokens and build a more robust legal firewall.

| Project | Protocol Operating Entity | Compliance Direction | | Uniswap | Front-end Interface + On-chain Contract | The Uniswap front-end does not hold assets, and the on-chain AMM model meets the "non-intermediary" condition, with no need to register with the SEC or CFTC. | | Aave | Lending Smart Contract | The core lending contract does not hold assets, and it meets the exemption criteria at the protocol level. | | Lido | staking service | stETH belongs to derivative rights, and if not sufficiently decentralized, it may not be classified as a digital commodity, and its asset attributes need further clarification. | | Curve | AMM Contract | The operation mode of Curve's on-chain pools is driven by a concentrated algorithm, without a custodial role, and the protocol layer is expected to be exempt from regulation. | Compound | Lending Smart Contract | The lending protocol is driven by smart contracts, with no asset custody. | StarGate | Cross-Chain Bridge Smart Contract | As a bridge protocol and liquidity pool provider, the protocol does not custody user funds and is not of an intermediary nature, thus expected to enjoy DeFi exemption provisions. |

4. Future Development

As of July 23, 2025, the CLARITY Act has successfully entered the review stage in the U.S. Senate, marking a key step in the regulatory legislation for digital assets. The biggest point of contention in the current legislative process is whether the Senate version can retain the key provisions regarding DeFi and token classification from the version passed by the House of Representatives. This decision will depend on the hearing procedures of the relevant Senate committees and subsequent amendments to the provisions.

From an overall trend perspective, the "CLARITY Act" is expected to drive the establishment of a clearer and tiered regulatory framework for crypto assets in the United States in the coming months: securities-type tokens will be regulated by the SEC, while commodity-type tokens will fall under the jurisdiction of the CFTC. This framework will provide clear compliance pathways for blockchain developers, DeFi protocols, trading platforms, and more, not only helping to reduce legal uncertainty but also stimulating compliant innovation and attracting institutional capital, further consolidating the United States' leadership position in global digital asset policy-making.

In addition, the interplay between the "CLARITY Act" and the "GENIUS Act" officially signed by President Trump establishes a dual-pillar foundation for the compliance system of the U.S. cryptocurrency market. The former focuses on asset classification and market structure, while the latter provides a safe harbor for stablecoin issuance and a registration exemption pathway. Together, they create a complete compliance loop of "exemption first, transformation later, and final classification." Once the "CLARITY Act" is also officially passed and signed into law, it will mark the entry of the U.S. cryptocurrency asset legislative system into a comprehensive implementation phase, significantly enhancing the legitimacy and strategic position of cryptocurrency assets within the mainstream financial system in the U.S.

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